hEDGEpoint report highlights trends and contrasts in coffee markets in Asia

Coffee stocks in Japan recovered to 2.5 million bags in August, an increase of 2.3% from the previous month, but still below typical stock levels averaging 19 to 20 weeks compared to the usual 23 to 24 weeks.

Despite a 23% drop in imports from October to June compared to the previous year, the gap has narrowed, with the July figure down 19% compared to the same window in the 21/22 cycle.

South Korea experienced an increase in imports in the 22/23 cycle (2.38 million bags), exceeding the figures from the previous period. The profile of coffee imports changed, with a notable recovery in the share of Arabica origins, reaching 43% in July.

The difference between imports and rising stocks in Japan suggests a slightly bearish tone, with consumption apparent around 5% below expected levels. However, South Korea shows a more positive trend with increasing imports and a change in the profile of coffee origins.

Last week, coffee stock numbers for Japan were released and hEDGEpoint Global Markets analyzed indicators for the two main coffee destinations in Asia: Japan and South Korea.

In the latest report on the Asian market, the consultancy highlighted that stocks were slowly recovering after a significant reduction driven by lower imports. The trend continued until August, reaching 2.5 million bags (+2.3% compared to the previous month, against +0.3% expected for August) - but still well below the usual levels of stocks expected for the country ( On average for the period, Japan operates with 23-24 weeks of inventories, and the current metric is at 19-20 weeks).

When analyzing imports to obtain the apparent consumption indicator, the difference in the accumulated numbers compared to the last cycle shortened: from October to June, imports were 23% lower compared to the previous year and 19% below estimates for the period .

For the period from October to July, imports are 19% below 21/22 (4.76 million bags against 5.90 million) and 16% below estimates for the period.

“However, despite a closer metric in terms of imports, this does not in itself explain the increase in stocks, and apparent consumption remains approximately 5% below expectations for the period (5.22 million bags against 5. 50 million bags) and also 5.4% below the same window in the 21/22 cycle. Therefore, despite the improvement in entries, production remains slightly bearish”, points out Natália Gandolphi, Coffee analyst at hEDGEpoint Global Markets.

Now, according to the analyst, it is important to make a distinction: imports are not behaving exactly the same way in Asian countries. In South Korea, imports from October to July are at 2.38 million bags, above the same period last year, and aligned to meet just over 3 million bags expected for the current cycle.

“In addition, the profile of coffee imported by the country has changed compared to the beginning of the year. In the first quarter, South Korea imported an average of 36% of its volume from predominantly Arabica origins. The metric remained virtually unchanged in the second quarter at 37%. Still, in the third quarter, the first figure already shows a substantial recovery: 43% in July - the historical average is around 40% and has decreased over the years (50% in 2008, against 25% in 2022)”, it says.

This week's focus is on coffee stocks in key Asian destinations Japan and South Korea. Japan's stocks recovered to 2.5 million bags in August, an increase of 2.3% from the previous month, but still below typical inventory levels. Despite a 23% drop in imports from October to June compared to the previous year, the gap has narrowed, with the July figure showing a 19% drop compared to the same window in the 21/22 cycle.

In contrast, South Korea saw an increase in imports (2.38 million bags) compared to last year. Interestingly, the profile of coffee imports has changed, with a notable recovery in the share of Arabica origins, reaching 43% in July compared to the historical average of around 40%. For the next cycle, this trend is expected to be observed in other destinations, highlighting Arabica on the global stage.

Source: Notícias Agrícolas